FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER 33-19598-D
SUNLlGHT SYSTEMS, LTD.
(Exact Name of Registrant as specified in its charter)
COLORADO 84-0992908
-------- ----------
(State or other jurisdiction of ( I.R.S. Employer Identification No.)
incorporation or organization)
5222 South Holly
Greenwood Village, Colorado 80111
- --------------------------------------- ----------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code 303-779-1900
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Indicate by check whether the registrant (1) has filed all reports required to
be filed by section 13 or 15 (D) of the Securities Exchange Act of 1934 during
the preceding 12 months ( or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares of the registrant's $.0001 par value common stock
outstanding as of December 31, 1997, was 11,500,064.
<PAGE>
SUNLIGHT SYSTEMS, LTD.
INDEX PAGE
Part I. Financial Information
---------------------
Item 1. Balance Sheets
December 31, 1997 and 1996 1-2
Statements of Operations:
Quarters and Six Months ended December 31, 1997 and 1996 3
Statements of Changes in Cash Flows
Six Months ended December 31, 1997 and 1996 4
Notes to Financial Statements 5-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 8
Part II Other Information
-----------------
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matter to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
PART 1. FINANCIAL INFORMATION
---------------------
Item 1 Financial Statements
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Balance Sheets
December 31, 1997 and 1996
ASSETS
1997 1996
<S> <C> <C>
Current assets
Cash $ 4,077 $ 37,063
Current portion of notes receivable 11,177 9,147
-------- --------
Total current assets 15,254 46,210
-------- --------
Other assets
Investment in oil and gas properties 171,970 171,970
Available for sale securities:
Energy Corporation common stock,
Restricted --
Unrestricted, including allowance for
increase in market value of $222,224 222,224
Intercell Corporation, common stock
Unrestricted, including allowance for
increase in market value of $2,722 and
$80,000 2,722 80,000
Notes receivable, discounted for imputed
interest at 10%,net of current portion 32,445 64,112
Deposits 4,090 4,090
-------- --------
211,227 542,396
-------- --------
$226,481 $588,606
======== ========
</TABLE>
See Notes to Financial Statements
-1-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Balance Sheets (Continued)
December 31, 1997 and 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
<S> <C> <C>
Current liabilities
Accounts payable $ 6,017
Accounts payable-related party $ 70,460
-------- --------
Total current liabilities 70,460 6,017
-------- --------
Stockholders' equity
Sunlight Systems, Ltd.
Preferred stock, $.0001 par value
5,000,000 shares authorized, none issued
Common stock, $.0001 par value
45,000,000 shares authorized, 11,500,064
issued and outstanding 1,150 1,150
Additional paid in capital 686,229 686,229
Unrealized gain on securities available for sale 2,722 302,224
Accumulated deficit (534,080) (407,014)
-------- --------
156,021 582,589
-------- --------
$226,481 $588,606
======== ========
</TABLE>
See Notes to Financial Statements
-2-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Operations
Quarters Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues $ 35,157 $ 1,206 $ 36,326 $ 1,206
General and administrative
expenses 49,343 83,746 83,314 97,909
-------- --------- -------- ---------
Loss from continuing
operations (14,186) (82,540) (46,988) (96,703)
-------- --------- -------- ---------
Discontinued Operations
Loss from operations of
discontinued segment (40,654) (175,365)
Loss on sale of
discontinued segment (134,947) (134,947)
--------- ---------
(175,601) (310,312)
--------- ---------
Net loss $(14,186) $(258,141) $(46,988) $(407,015)
======== ========= ======== =========
Net loss per common
shares $(.0012) $(.0254) $(.0041) $(.0425)
======= ======= ======= =======
Weighted average number
of common shares
outstanding 11,500,064 10,147,000 11,500,064 9,576,000
========== ========== ========== =========
</TABLE>
See Notes to Financial Statements
-3-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Cash Flows
Six Months Ended December 31, 1997 and 1996
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net loss $(46,988) $(407,015)
Adjustments to reconcile net loss to net cash
from operating activities
Loss on sale of long term assets 43,889
Gain on sale of investments (32,535)
Depreciation and amortization 9,704
Amortized discount on notes receivable (2,273) (1,206)
Change in assets and liabilities:
(Increase) decrease in:
Deposits (4,090)
Increase (decrease) in:
Accounts payable 38,960 6,019
-------- ---------
Net cash used by operating activities (42,836) (352,699)
-------- ---------
Cash flows from investing activities
Proceeds from sale of investments 32,535
Purchase of property and equipment (71,172)
Purchase of distribution and dealerships (42,546)
Increase in start-up costs (30,627)
Proceeds from sale of assets 18,700
Payments received on notes receivable 6,250
-------- ---------
Net cash used by investing activities 38,785 (125,645)
-------- ---------
Cash flows from financing activities
Proceeds from sale of common stock 515,000
-------- ---------
Net cash flows from financing activities 515,000
-------- ---------
Net increase (decrease) in cash flows (4,051) 36,656
Cash, beginning 8,128 407
-------- ---------
Cash, ending $ 4,077 $ 37,063
======== =========
Noncash investing and financing activities:
Assets acquired by issuance of
common stock:
Investment in oil and gas property $171,970
Marketable equity securities of Energy Corporation $ --
Marketable equity securities of Intercell Corporation $ --
Note receivable acquired for sale of assets $ 72,053
</TABLE>
See Note to Financial Statements
-4-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements
1. Organization, Business and Merger of Mendell-Denver Corporation with
Sunlight Systems, Ltd.
Mendell-Denver Corporation (Mendell) was formed on July 22, 1985 for the
purpose of acquiring, exploring and developing oil and gas properties. On
May 1, 1992, Mendell sold all of its interests in oil and gas properties
and has since had no business operations.
Sunlight Systems, Ltd. (Sunlight) was formed on June 22, 1996. On July 17,
1996 it became a wholly-owned subsidiary of Mendell. Mendell was merged
with and into Sunlight with Sunlight being the surviving corporation.
Shareholders of Mendell received one common share of Sunlight for five
shares of Mendell.
Sunlight was a dealer in Colorado and Nevada and a distributor in Illinois,
Ohio, Michigan and Indiana of skylights manufactured or imported by Sun
Tunnel Systems, Inc. As discussed in Note 4, on November 1, 1997 the
Company sold its dealerships and distributorships. The Company is actively
seeking business opportunities for potential acquisition or merger.
2. Presentation of Interim Information
In the opinion of the management of Sunlight Systems, Ltd. (the Company),
the accompanying unaudited financial statements include all normal
adjustments considered necessary to present fairly the financial position
as of December 31, 1997, and the results of operations for the quarters and
six months ended December 31, 1997 and 1996, and cash flows for the six
months ended December 31, 1997 and 1996. Interim results are not
necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form
10-QSB, and do not contain certain information included in the Company's
audited financial statements and notes for the fiscal year ended June 30,
1997.
-5-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
3. Investment in Intercell Corporation
Unrealized gains and losses of marketable securities available for sale as
of December 31, 1997 are as follows:
Gross Fair
Shares Cost Unrealized Value
(Losses)
Intercell Corporation 23,623 $2,722 $2,722
.
-6-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
4. Discontinued operations
On November 1, 1996, the Company sold its dealerships and distributorships
in skylights manufactured or imported by Sun Tunnel Systems, Inc. including
all of its assets. In separate transactions, the Company received 1)$18,700
in cash 2) a note receivable for $60,000 and 3) a note receivable for
$30,000. The notes receivable are collaterialized by the assets sold and
require payments of $1,250 and $1,000, respectively. The notes receivable
are discounted to recognize an interest rate of 10%. The Company recognized
a loss on the sale of $134,947.
-7-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
-------------------------------------------------
LIQUIDITY:
- ---------
At December 31, 1997, the Company had a negative working capital of
$(55,206) this position is due to an increase in accounts payable. At December
31, 1996, the Company had positive working capital of $40,193. This positive
position is from the receipt of cash proceeds for the sale of stock less
operating losses.
CAPITAL RESOURCES
- -----------------
Total assets of the Company as of December 31, 1997 were $226,481 which
consisted principally $174,692 in investments and $43,622 in notes receivable.
Total assets of the Company as of December 31, 1996 were $586,606 which
consisted principally of $474,194 in investments acquired for common stock, and
$73,259 notes receivable.
Stockholders' equity decreased during the quarter ended December 31, 1997
due to general and administrative expense and costs which were principally
incurred in evaluating potential acquisitions. These were partially offset by
revenues principally from the sale of investments. Stockholders' equity
decreased during the quarter ended December 31, 1996 due to losses recognized
while operating through November 1, 1997 and selling on November 1, 1997 its Sun
Tunnel Systems, Inc. dealerships and distributorships.
RESULTS OF OPERATION
- --------------------
For the quarter and six months ended December 31, 1997 the Company had
revenues of $35,157 and $36,326, respectively which included $32,535 from sale
of investments. The Company had sales of $24,776 and $37,894 for the quarter and
six months ended December 31, 1996, respectively during the period until
November 1, 1996 when the company discontinued its operations as a dealer and
distributor of skylights.
General and administrative expenses for the quarter and six months ended
December 31, 1997 were due to seeking other acquisition or merger opportunities
General and administrative expenses for the six months and quarter ended
December 31, 1996 of $97,909 and $83,746, respectively were due to initiating
the Company's business activities as a dealer and distributor of skylights and
seeking other acquisition or merger opportunities.
-8-
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
- ------ -----------------
None
Item 2. Change in Securities
- ------ --------------------
None
Item 3. Defaults Upon Senior Securities
- ------ -------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
There were no meetings of security holders during the period
covered by this report.
Item 5. Other Information
- ------ -----------------
None
Item 6. Exhibits and Other Reports On Form 8-K
- ------ --------------------------------------
(a) Form 8-K:
None
(b) Exhibits:
Exhibit 27.1 - Financial Data Schedule
-9-
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 or Section 15(D) of the
Securities Exchange Act of 1934, the Registrant duly has caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 10, 1998 Sunlight Systems, Ltd.
(Registrant)
/s/ Patricia E. Johnson
By: -----------------------------------
Patricia E. Johnston
Chief Executive Officer, President,
Chief Financial Officer, Treasurer,
And Director
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE REGISTRANT'S
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER, 1997 AND IS QUALIFIED IN ITS ENTIRETY
TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 4,077
<SECURITIES> 0
<RECEIVABLES> 11,177
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,254
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 226,481
<CURRENT-LIABILITIES> 70,460
<BONDS> 0
0
0
<COMMON> 1,150
<OTHER-SE> 688,951
<TOTAL-LIABILITY-AND-EQUITY> 226,481
<SALES> 0
<TOTAL-REVENUES> 36,326
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 83,314
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (46,988)
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,988)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,988)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
